Bobby's Trade Journal – Page 3 – It's not the destination but the journey…

Entered Two Live Trades

Well, looking at the yesterday’s red candle and today’s little rally, it was sounding as if my guess from yesterday was somewhat true. I guessed that market would go up in the morning then go lower later on. Once the market was at 200 points, it slowed. So I entered two trades to the short side. Bought one AAPL put and 2 BAC Puts. Was slightly up during the late afternoon but towards the end of the day, due to the rally, I’m down a little.

1 AAPL Dec. 79 PUT at .97.

2 BAC Dec. 7.50 PUTs at .19.

Let’s see how this works. Forgetting the DOW divergence that i’ve been seeing for days, this is the current market trend. Up down up down. Once way too much then corrects. But it hasn’t really ever moved down one and then corrected itself the next day. It has recently gone down 3-4 or even 5-6 days before correcting back for 2-3 days. So after a 700 pt drop, it would seem ok for it to go up 200 points and then resume temporary downward move.

In the long run investors could already buy good companies at these prices and forget about them for a while. But what is a good company? Comapnies that used to be good aren’t really great now. They’re all showing crashes and crisis.

Better to wait a little more.

Markets Are Still Down

Well, the market is still down. The indices are painting red with no worry. What can ths mean to us daytraders? In the past, my posts have been focused on going long and on indices showing long term buying signals. In these posts, what’s not reflected is that despite the long term indicator signals the potential to daytrade is still present.

So today was a 600 pointer red day! Well after a number of green days, this is a first red day. Probably the market will pull up in the morning. At this point it would be good to enter some short term short trades. Buy puts, short shares, buy reverse ETFs, etc. Having said all of that, let’s see what the DOW charts show.

The Fibonacci retracement shows that the DOW retraced to .618 level, then just powered thru all resistance to the down direction. It will probably go up to .382 or .50 level then go down. Seems the 0.00 level might be easy. It’s a previous known low in recent days. There’s a little resistance at today’s close.

Actually, that is almost 700 pts!

Down, The Trend Goes!

So the market is going red. This was more expected that going green. As shown on previous charts, the market technical divergence is showing strong and I should make it clear indicate an impending reversal. My previous post says it shows reversal. A reversal is only present when it happens. So that charts only show impending reversal. How long it takes to reverse of whether further technical indicators evolve showing more downside is upto the daily market swings – or in other words upto the fear of the traders.

Market Recap – Nov 26th & 28th.

Almost 349.xx points! The whole week was pretty much green. So what will the next week bring? It would sound as if the market has finally changed direction. However, the market sentiment might still be leaning to be bearish. Many technicals on the DOW are diverging to show trend reversal. But this trend reversal is going to be swing or slightly longer term reversal. That would mean, Monday could still be red. The market might go down from here little more then rebound. Or it might simply rebound. We don’t know. The first few hours on Monday should be good indicators.

MACD, CMF, RSI are showing positive divergence. CMF shows buying pressure. Monday is looking at trendline, normal, and Fib resistance. If it breaks, above, it should continue on to 9000 mark. Then eventually to 9500 mark.

What are ETFs?

ETFs are exchange-traded-funds. The best place to get information is investopedia.com. An exchange traded fund tracks an index, commodity, or a basket of assets like an index fund. This explanation is from investopedia.

To explain it a little, an ETF trades like a stock on an exchange. You buy/sell the ETF just like you buy/sell a stock thru your broker. You use the same tools. You chart the ETF. You analyze the technical indicators, and you can also trade options on the ETF. It depends on the ETF, but most have option chains.

So how does it help you?

Very good question. First remember that an ETF can track an index or a commodity or a basket of assets. So you can have an ETF that tracks gold. Or tracks silver. If you hear from your friend that gold is spiking really nicely lately and you verify that thru your analysis then you have two options if you decide to be long on gold.

Go down to the local store and buy some gold coins.
Login to your brokers site and buy the ETF that tracks gold – GLD.

Here’s how Ameritrade’s explanation of this ETF reads:

The investment seeks to strive to reflect the performance of the price of gold bullion, less the Trust’s expenses. The Trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the Trust terminates and liquidates its assets, or as otherwise required by law or regulation. The Trust is not managed like an active investment vehicle, and it’s not registered as an investment company under the Investment Company Act of 1940

That’s good because now instead of constantly making trips down to a physical shop with your gold coins, you simply buy/sell online thru your broker. Similarly, you can buy/sell silver and other commodities.

That’s an example of an ETF that tracks a commodity. What about one that tracks an index? Fret not!

If you see that S&P 500 Index is uptrending and you wish you could just ride the index as opposed to figuring out which stocks in the index are doing good or which stocks in general are doing good, then you could simply trade the ETF SPY. This ETFs seeks to duplicate S&P 500 Index’s performance. You can trade options on SPY bigger leverage.

So it benefits you by knowing that when an index is doing well, you can buy the ETF tracking the index’s performance. It won’t make you rich overnight. Consider that an index may fall 500 points but that’s typically 2-3% move. Options will give you bigger leverage.

Trading ETFs by definition doesn’t give you a big benefit in % returns. But it gives you a benefit in not having to guess the direction of your holdings. You can daytrade the ETF like any other stock for small or big gains.

You can trade options and daytrade options on ETFs also.

Market Recap – SPY Analysis – Nov. 24th.

SPY performed well today along with the market. SPY is the S&P500 ETF that you can trade and trade options on. I wasn’t sure yesterday which way the market will go. Will it, after having gone up on Friday, go down today? Or will it open green. So far the sentiment is bullish. Bouncing off of long time lows. S1 was the support point on the way down. On the way up, it would be resistane. it was breached and the candle held. So this should be a support point now. Next resistance using S&R lines would be R1. However, the trendline in blue on the top would be the next resistance probably.

RSI is positive, MACD is turning up and about to cross the trigger line. Is this is a buy signal? Well, I don’t know. But during the day this morning, the market had good signals.

Volume was very low earlier on the DOW, and by close it was high. On SPY the volume was average to high. This should mean good thing for tomorrow. Dec 87 calls that I’m holding in my practice account are only down $400 or so now.

The Fib retracement levels should also be a good point to use for trading.

This is the market recap for the day. Almost 400 points. That’s good. Now, if the 9K is reached, it might be good news soon.

Market Analysis – Nov. 21st

So looking at the current situation of the market, it might not be such a bad idea to be long. The market is near its long time low.

RSI is making lows at the same level. MACD is making higher lows. CMF making higher lows. If we have a close above 80, it would nice. But a close over 86 would be higher than the previous two candles. It would be a very bullish signal. Might be more likely to see it closing above 80. I’d be thinking of possibly getting some calls. Dec 85 SPY calls would be decent. But also expensive. Can only afford Dec 90. Those are too far out of the money. SPY could certainly see 90 before the end of Dec. but it’s a long way to go and time decay would also start factoring in.

Market Recap – Nov. 21st.

So you, the reader, might be wondering why I post the market analysis on here with the market performance for the day. This is normally not an analysis but more of a recap of the days market direction. The main reason is because this is my trade journal and I want to look back as many days as I’d like and see what the DOW and the market did and how far it fell or rose.

Additionally, there’s no other place that will archive it in numbers. Sure you can look at the daily chart on the stockcharts.com site of many other site, but you can see the exact numbers nicely listed.

Anyway, it was a sudden move towards the end of the day. If I had held my position it would have been a nice profit for that effort. But from the normal events of the day, it just seemed those options would expire and the entire premium would be lost. So I thought to just sell at loss. And then it rallies. Oh well, next time, I’ll just hold. Additionaly, being expiration day didn’t help.

I’ve gotten good advice on how to daytrade. I will follow it as much as possible.

Today Was a Weird Day!

Today was truly crazy. I had bought some Nov 230 SRS Puts. They were supposed to go up all day. But they took a serious beating. A serious beating. The market kept falling all day. And so did the SRS puts. For those that don’t know what SRS is, it’s a ProShares ETF. Corresponds to the real estate sector and trades as the inverse of DOW. So when the DOW is up, SRS is down and vice versa. So Puts on the SRS will be profitable if SRS goes down. In other words the Puts would be profitable if DOW rises.

After many days of beating, the DOW was due for a rise. It was rising but kept falling. SRS kept rising and making higher highs. This meant the PUTs were at 0 at one point.

Then finally in the last 15 minutes the puts went from .1 to 11. That’s a 99% increase! Oh well! I had already sold my position at a loss after the first time the bid showed $0.

So I’ve decided to take this a little more seriously. I will try to trade more ProShares and more ETFs if possible. I have so far lost $1400 in the market. Hardly, the serious type of loss that many many traders have suffered. Hopefully, heeding the warning by other traders and using my practice accounts’ experience, I can try to do better.

I will be trading with a $100 that I have left in the account. May not mean much to anyone. But I’d rather try to see if I can make this go to $500. Until I either lose this or reach $500, I will try not to fund the account anymore. I have refined the rules more and will update them soon.

Market Analysis – Nov 20th.

So it was a red day. Many traders were thinking that it would be a green day. However, due to GM bailout and auto bailout plan just stalling, the uptrend was broken past noon and it just went down. Twice as much as the previous low in the day. Around noon, it seemed as if the DOW was going to be green by end of day. Not so in the end.

This is the major reason why bailouts just don’t work. First, they cause undue burden. Next many others line up for money. Arriving in their jets, no less.